Thursday, November 01, 2007

finally, monsieur, a wafer thin mint

It is a minor thing, really. The Fed’s rate cut yesterday. It goes against every principle that the Federal Reserve used to adhere to. It was accompanied by a Commerce Department report that told a tale of epic fiction about inflation – down this quarter to its lowest point in years, apparently. Such is the magic of the hedging formulas now used to produce almost any result that you want. The rate cut sank the dollar further, and raised the price of oil. In effect, the Fed declared that its raison d’etre, at the moment, is simply and solely to help out the richest investors in this country, and the rest of the country be damned.

Sure, that has been the Bush mantra since 2001. Although it is a mistake to think that the change in degree brought about by the Bush seizure of power is a change of kind – we have had the same economic and social trends since 1981. The quiet violence of a policy intended to reduce the majority of the country to a comfortable peon status, where their major power would consist of selecting their favorite singers on American Idol and, if they were lucky, shifting their credit card debt to a lower interest rate on a special one time only offer, while in the background economic and political power was concentrated in the hands of a debauched few, has become the open violence of that meshing of interests between the financial, the petro-chemical, and the war industries, displaying its naked form in the great war crime of Iraq. We have been coming to this point ever since I was legally entitled to fuck. So I should be as used to the mix of affluence and powerlessness as anyone else. But unluckily for me, I was perverted to the very marrow by Sunday School, Bob Dylan, and the game of Monopoly, all of which taught me that untrammeled and irresponsible power forms itself, irresistibly, into murder. It also taught me about Get out of Jail Free cards. They are now issued like party favors in D.C.

So what happened yesterday and what happened this summer is that the Fed dispensed with disguises and openly became a boiler room adjunct of Wall Street. Having crafted one bubble after another to keep the economy humming along, we have reached the end of the string. Bubbles are the crack capitalist way to affect redistribution of the wealth. The crack for the common man comes in the form of an expanded power of purchase on all levels – although one not accompanied by a corresponding expansion of earnings. This, in turn, leads to an ever widening dominance of the investor class, the group that is, collectively, ‘owed’. That group, however, monetizes what it is collectively owed – its virtual capture of surplus value - to expand its own purchasing power – it builds a second tier of debt on the debt it is owed. And like the tower of Babel, from the ground level this looks like it can go on forever. There is an upper limit, however, at least theoretically, a point where the expanded power of purchase of the common man can go no further without something drastic happening – for instance, an expansion of real earnings. The primary directive of the Fed is to keep that from happening – it is the institutional embodiment of strike breaking in the U.S. But if that doesn’t happen, the wealthiest themselves will become overextended – they won’t be able to monetized what they are owed in the vulgar sense, that is, with actual money, without risking massive default, which comes down to one of those old economic laws: you can’t squeeze blood from a turnip.

So, to treat the pain, the Fed has turned into Doctor Feelgood. But in two or three months, the pain is going to show up at the gas station. And nobody is going to like that pain. Similarly, the metric that the Fed really despises – how much common things cost for common people – is going to intrude like a big party crasher. On the upside, given the intangible of warmer weather, there will probably be less heating oil used in the cold states this year – that which doesn’t kill us, as Fred N. liked to say, allows us to contrive ever more elaborate systems for killing ourselves.

So the question then will be: how much more shit will the common man swallow? Since shit eating and toad eating have been the most popular American pastimes lately, it ought to be quite something to watch: this moment when we all can’t eat that last piece of crap, handed to us from on high.

About Me

MANY YEARS LATER as he faced the firing squad, Roger Gathman was to remember that distant afternoon when his father took him to discover
ice. Or rather, to discover the profit making potential of selling bags of ice to picnicking Atlantans, the most glorious of the old man's Get Rich schemes, the one that devoured the most energy, the one that seemed so rational for a time, the one that, like all the others - the farm, the housebuilding business, the plastic sign business, chimney cleaning, well drilling, candy machine renting - was drawn by an inexorable black hole that opened up between skill and lack of business sense, imagination and macro-economics, to blow a huge hole in the family savings account. But before discovering the ice machine at 12, Roger had discovered many other things - for instance, he had a distinct memory of learning how to tie his shoes. It was in the big colonial, a house in the Syracuse metro area that had been built to sell and that stubbornly wouldn't - hence, the family had moved into it. He remembered bending over the shoes, he remembered that clumsy feeling in his hands - clumsiness, for the first time, had a habitation, it was made up of this obscure machine, the shoe, and it presaged a lifetime of struggle with machine after machine.